With Hard Asset Prices Plummeting, What's Next for the OA Market?

[delekkerste]

I'm sorry you felt the need to post an extremely long rebuttal as I did use the

 

Well, since many people use the graemlin to try and take a shot at someone while trying to pre-empt a reprisal, the intention is not always clear. My first reaction was someone must have hacked into your CGC account.

 

In any case, I type more than 80 words per minute, so that long rebuttal probably took as much time as the average person's two-liner.

 

 

Yes, but not as part of a discussion to switch into collecting more comics and OA but about how much, and I quote, "I LOVE GOOLLLLLLLLLLLLLLLLLLLD!!!!!!!"

 

You have to read more than just the first post. :doh: And, like I said, I don't need to create more threads about buying more comics and OA - that's what every other thread on the Boards is for.

 

 

I started back in the mid-80s so I consider anyone that started this millennium as a late entrant.

 

Yeah, but in context, it's hard to argue that I was so late to the party by starting in 2002 that I have to resort to trying to single-handedly mastermind schemes to crash the OA market in 2013!

 

 

To get back to your original question, I think that only a minority of collectors are likely to think about price of hard assets when making decisions about comics or original art. I've collected for a long time and it's really, really, really, really rare to hear it discussed as factor unless it's part of a larger discussion about the particular direction of the economy.

 

Like I said, it's not that people take what happens to hard assets and turn that into a 1:1 causative input into their OA buying/selling process. It's more that the same factors that affect other hard asset prices (confidence in the economy, interest rates/liquidity in the system, monetary inflation, credit expansion/contraction, wage inflation/labor market conditions, etc.) will affect both consumers' pocketbooks and psychology, if indirectly.

[adamstrange]

Like I said, it's not that people take what happens to hard assets and turn that into a 1:1 causative input into their OA buying/selling process. It's more that the same factors that affect other hard asset prices (confidence in the economy, interest rates/liquidity in the system, monetary inflation, credit expansion/contraction, wage inflation/labor market conditions, etc.) will affect both consumers' pocketbooks and psychology, if indirectly.

Even with this clarification, I would say that it isn't discussed much. That might disappoint you as you might prefer people to be more rational and far-sighted with their asset purchases but it is what it is. Frankly most folks aren't that careful with their money and live a life-style that leaves far too little margin for error.

[vodou]

That might disappoint you as you might prefer people to be more rational and far-sighted with their asset purchases but it is what it is. Frankly most folks aren't that careful with their money and live a life-style that leaves far too little margin for error.

Translated: most people are irresponsible money managers in general, throw in a dose or two of emotion (collectibles) and it's all over? I agree. However the money 'markets' (credit, liquidity) tend to force responsibility when those wells dry up. Especially if it's in dramatic fashion (late 2007-early 2009, SHIBOR last week). And the long slow rise in the 10 yr shows us what happens when there are more sellers than buyers systemically over a period of time; it's not always a rush to the exits! Same with commodities. The war against deflation is not being won (at present).

 

Anybody here a fan of "The Turning" by Strauss and Howe? It describes deeper generational cycles than the usual 30 year cycle in collectibles discussed around here...

[delekkerste]

Even with this clarification, I would say that it isn't discussed much. That might disappoint you as you might prefer people to be more rational and far-sighted with their asset purchases but it is what it is. Frankly most folks aren't that careful with their money and live a life-style that leaves far too little margin for error.

 

It doesn't have to be conscious and it doesn't have to be discussed much, or even at all. At the end of the day, what is going on in the real world, outside our hobby, becomes part of the collective social mood/consciousness and those inputs become embedded in the decisions that people make, whether consciously or sub-consciously. Again, unless you were living under a rock in 2008, your decision-making was affected whether you knew the first thing about stocks and subprime loans or not.

[adamstrange]

Even with this clarification, I would say that it isn't discussed much. That might disappoint you as you might prefer people to be more rational and far-sighted with their asset purchases but it is what it is. Frankly most folks aren't that careful with their money and live a life-style that leaves far too little margin for error.

 

It doesn't have to be conscious and it doesn't have to be discussed much, or even at all. At the end of the day, what is going on in the real world, outside our hobby, becomes part of the collective social mood/consciousness and those inputs become embedded in the decisions that people make, whether consciously or sub-consciously. Again, unless you were living under a rock in 2008, your decision-making was affected whether you knew the first thing about stocks and subprime loans or not.

I would expect events similar to the "great recession" of 2008/9 to influence the purchase of original art as it directly affected tens of millions and created an uncertainty as to how many more would be impacted and how much more it would affect wealth & income.

 

What you are discussing in this thread are indicators of an extended change in the economic picture and I'm suggesting that they are too early and too unclear in their effects to likely be the topic of discussion. You are in the financial industry and study the tea leaves extensively and may not realize that most others do not follow as closely or are unable to read as much from those signs as to how it might impact them. If folks aren't able to see an impact, then they are unlikely to change their plans.

[delekkerste]

What you are discussing in this thread are indicators of an extended change in the economic picture and I'm suggesting that they are too early and too unclear in their effects to likely be the topic of discussion. You are in the financial industry and study the tea leaves extensively and may not realize that most others do not follow as closely or are unable to read as much from those signs as to how it might impact them. If folks aren't able to see an impact, then they are unlikely to change their plans.

 

Well, that's exactly my point. People who follow this stuff are starting to see it now. People who don't will see/feel it peripherally some months down the line. Which camp would you rather be in?

 

In the land of the blind, the one-eyed man is king.

[adamstrange]

Camp North Star

[suspense39]

The Christie's London contemporary art auction looked to be really good....mid range work and really good prices realized....perhaps it's like you said Gene a few more auctions before a decline in OCA or contemporary art.....hopefully not, I hope the last few month were just a global hiccup!

 

Ill post links here in case anyone is interested

 

http://www.artnet.com/PDB/PublicAuctionResults.aspx?collection_id=304144

 

http://www.artnet.com/PDB/PublicAuctionResults.aspx?collection_id=304036

 

[inovrmihd]

I don't think this thread is focusing enough on the supply side of the equation. Gene, when you started this thread, were you specifically talking about the high end of the "OA market" (either directly or as an indicator of the overall market)? That was my assumption, but I wanted to be clear (I think we are already seeing a market bifurcation where fresh to market A+ or "perceived" A+ pages continue to bring in strong prices while the lower end has stalled).

 

My understanding is that supply of A+ superhero silver age and key 80's pages is not very deep. The bulk of it is in a handful of collections, and if the owners are extremely wealthy or for whatever reason don't worry about money, it doesn't really matter what is going on with the economy, hard assets or the art market in general. We saw a supply response recently w/regard to McFarlane and Miller DKR (my personal opinion is that we have seen the highs, or will see when the DKR cover sells in the next auction). but I thought those pages were in different hands than the silver age material. I don't think we have seen a supply response in regard to A+ silver age pages. I think that we have seen lesser pages bring prices I thought only A+ pages would bring, but that is because (again in my opinion) the true A+ material isn't available, at least not at the public auctions I have seen. The market may have topped out, but I think until you get a genuine supply response (which in my opinion would require one of the major collectors to liquidate), you will not get a significant decline in prices, at least barring an economic collapse..

[thethedew]

This exactly.

 

For desirable older pieces to free up, more collectors of that material would have to be in much a more precarious financial position than they seem to be.

 

Since we've gone through the worst financial shock since the 1930's without a whole lot of (viewable) movement from these desirable pieces, I think it's doubtful we'll see much good stuff free up anytime soon.

 

Squeeze supply, add more collectors, and prices/demand will only rise.

[delekkerste]

I don't think this thread is focusing enough on the supply side of the equation. Gene, when you started this thread, were you specifically talking about the high end of the "OA market" (either directly or as an indicator of the overall market)? That was my assumption, but I wanted to be clear (I think we are already seeing a market bifurcation where fresh to market A+ or "perceived" A+ pages continue to bring in strong prices while the lower end has stalled).

 

My understanding is that supply of A+ superhero silver age and key 80's pages is not very deep. The bulk of it is in a handful of collections, and if the owners are extremely wealthy or for whatever reason don't worry about money, it doesn't really matter what is going on with the economy, hard assets or the art market in general. We saw a supply response recently w/regard to McFarlane and Miller DKR (my personal opinion is that we have seen the highs, or will see when the DKR cover sells in the next auction). but I thought those pages were in different hands than the silver age material. I don't think we have seen a supply response in regard to A+ silver age pages. I think that we have seen lesser pages bring prices I thought only A+ pages would bring, but that is because (again in my opinion) the true A+ material isn't available, at least not at the public auctions I have seen. The market may have topped out, but I think until you get a genuine supply response (which in my opinion would require one of the major collectors to liquidate), you will not get a significant decline in prices, at least barring an economic collapse..

 

I agree with this, to an extent. I don't necessarily see a significant decline in prices for a while. Right now, you are right - demand for A/A+ Silver Age OA exceeds the supply. I don't know that we'll continue to see OA prices go from strength to strength, but I don't necessarily see a big downturn at the high end either.

 

Like I said, it's more a case of the sellers faring better than buyers at present levels. You suggest that we are not focusing enough on the supply side of the equation. I would suggest that we are not focusing enough on the fact that there is a buyer and a seller in each of these eye-popping transactions. Because of the supply/demand imbalance, in most cases you have to knowingly overpay to beat out the competition for A/A+ pieces these days, usually when a piece is fresh to market. I suspect that trying to resell these pieces and make good returns after inflation and transaction costs is going to be a very tough proposition for years to come (in some cases, probably ever). Strong auction results I think overstate these pieces' long-term value is the point I'm trying to make, especially in light of the macro picture.

 

As for high-end collectors not being affected by external factors, I don't believe that for a second. We didn't see these guys swooping in for the kill in early 2009. Fact is, guys who had assets got disproportionately clobbered when asset prices imploded, and it's the net change that has a bigger psychological effect vs. the pile you have remaining (flow > stock). Also, we've seen one of the biggest whales in the hobby (probably top 1 or 2 in terms of estimated net worth) move to the sidelines in the past couple of years, and I'm told that insane prices played a big part in that.

 

I'm not saying don't buy. I'll still be buying when pieces I really, really want become available. But I won't be as aggressive, I'll be far more selective, and I will go in knowing that there's a good chance I will earn negative real returns over my holding period. I certainly won't be putting a dime into OA for investment purposes - why would I pay 2013 prices for art when gold is down by a third, silver by two-thirds, Brazilian equities have been cut in half, bond yields have spiked, emerging markets equities and debt are in fire sale mode, etc.? The 2011 and 2012 excuse of there's no other place to put my money just isn't valid anymore. There are loads of opportunities opening up all around. Remember, as far as earning investment returns goes, it's not what you buy, it's when (i.e., at what price) you buy it (and when you sell it). I don't think 2012 and 2013 buyers of OA are going to fare very well over the long run, much as 2006 buyers of real estate, 2008/2011 buyers of commodities and EM securities, 2011 buyers of precious metals, 2012 buyers of long-term Treasury bonds, 2013 buyers of junk bonds, etc. haven't done well.

 

I just think that people should go into things with their eyes wide open - this ain't your grandfather's OA market, and the market is not likely to act exactly the same as it has in the past given the sudden and significant rise in prices over the past couple of years. The market is just at a completely different starting point than any previous history one can point to.

[inovrmihd]

I agree with this statement completely (too lazy to figure out how the quote feature works):

 

"I suspect that trying to resell these pieces and make good returns after inflation and transaction costs is going to be a very tough proposition for years to come (in some cases, probably ever). Strong auction results I think overstate these pieces' long-term value is the point I'm trying to make, especially in light of the macro picture."

 

I think if anything, this is understated. I am pretty sure this is the top (I won a few pieces at Heritage, which is a pretty good sign). If better material comes to market it will/may garner higher prices (the DKR cover, for example) but it will have to legitimately be better material, at least in my opinion. I think anything that was sold in the last few years is not gong to sell for significantly more than it did at the prior auction.

 

 

[inovrmihd]

I have a question about the "whales". Are there people that are, extrapolating from recent auction prices, sitting on collections worth 20 or 30 million+ dollars (or more)? I have heard of pages out there that could bring low to mid 6 figures based on comps (and not the ridiculous McSpidey Nut Shot or the DKR splash either), and I am excluding from this calculation any really big items like the Giant Size X-MEN 1 Cover or any really key covers for that matter. I am just talking about lots and lots of really A+ pages. It just seems like a staggering amount, and if true, it is hard to understand that more of it doesn't come to light. Obviously there is no rush as long as you can get 50k+ for a B+ page, but am I right (or low) about the implied value of some of these collections (and again, I am talking quantity of A+ pages and am not even counting the over the top covers that might bring 6 to 7 figures on their own)?

[Bronty]

Also, we've seen one of the biggest whales in the hobby (probably top 1 or 2 in terms of estimated net worth) move to the sidelines in the past couple of years, and I'm told that insane prices played a big part in that.

 

FWIW - I'm sure it did, but almost no one remains a super aggressive buyer forever, even if they are loaded. After 5 or 10 or 15 years or what have you most people burn out and/or just get diminishing marginal enjoyment out of that next piece. I.e. if you have no A+ pages, paying six figures for one might seem like a good idea. If you already have 50 pages like that, paying six figures won't seem so smart, especially when one started out paying high four figures for those same items (and, as Tim has quite rightly pointed out in the past, we can't help but benchmark values to what we *used* to pay).

 

Sooner or later, even for the wealthy, the appetite to outspend everyone else is bound to wane, or one loses interest, or the wife wants another beach house Most everyone has a shelf life in terms of being top dog. The wealthy will have a longer shelf life of course, but even that generally has limits.

 

So.... one guy with a lot of art, who is used to paying more modest prices, deciding to hang 'em up.... there's only so much we can draw from that.

[Bronty]

 

As for high-end collectors not being affected by external factors, I don't believe that for a second. We didn't see these guys swooping in for the kill in early 2009. Fact is, guys who had assets got disproportionately clobbered when asset prices imploded, and it's the net change that has a bigger psychological effect vs. the pile you have remaining (flow > stock).

 

Yeah I'm sure that's true... that's basically common sense. The more you have invested the more you lose when the investments take a hit.

[jjonahjameson1]

I have a question about the "whales". Are there people that are, extrapolating from recent auction prices, sitting on collections worth 20 or 30 million+ dollars (or more)? I have heard of pages out there that could bring low to mid 6 figures based on comps (and not the ridiculous McSpidey Nut Shot or the DKR splash either), and I am excluding from this calculation any really big items like the Giant Size X-MEN 1 Cover or any really key covers for that matter. I am just talking about lots and lots of really A+ pages. It just seems like a staggering amount, and if true, it is hard to understand that more of it doesn't come to light. Obviously there is no rush as long as you can get 50k+ for a B+ page, but am I right (or low) about the implied value of some of these collections (and again, I am talking quantity of A+ pages and am not even counting the over the top covers that might bring 6 to 7 figures on their own)?

 

Well, there's this fella on CAF, and he's got some very nice stuff for the public to see. I also recall he has the cover to Conan #1 and Marvel Spotlight #5, among several others: http://www.comicartfans.com/GalleryDetail.asp?GCat=717

 

Who knows what he's got stashed away in the closet?

[Pete Marino]

I have a question about the "whales". Are there people that are, extrapolating from recent auction prices, sitting on collections worth 20 or 30 million+ dollars (or more)? I have heard of pages out there that could bring low to mid 6 figures based on comps (and not the ridiculous McSpidey Nut Shot or the DKR splash either), and I am excluding from this calculation any really big items like the Giant Size X-MEN 1 Cover or any really key covers for that matter. I am just talking about lots and lots of really A+ pages. It just seems like a staggering amount, and if true, it is hard to understand that more of it doesn't come to light. Obviously there is no rush as long as you can get 50k+ for a B+ page, but am I right (or low) about the implied value of some of these collections (and again, I am talking quantity of A+ pages and am not even counting the over the top covers that might bring 6 to 7 figures on their own)?

 

Well, there's this fella on CAF, and he's got some very nice stuff for the public to see. I also recall he has the cover to Conan #1 and Marvel Spotlight #5, among several others: http://www.comicartfans.com/GalleryDetail.asp?GCat=717

 

Who knows what he's got stashed away in the closet?

 

There are a a handful of insane collections on CAF that are prob worth a few mil that i've noticed... I sure there are many I have not noticed....

[ItsJustRyan]

[Monkeyman]

I don't think this thread is focusing enough on the supply side of the equation. Gene, when you started this thread, were you specifically talking about the high end of the "OA market" (either directly or as an indicator of the overall market)? That was my assumption, but I wanted to be clear (I think we are already seeing a market bifurcation where fresh to market A+ or "perceived" A+ pages continue to bring in strong prices while the lower end has stalled).

 

My understanding is that supply of A+ superhero silver age and key 80's pages is not very deep. The bulk of it is in a handful of collections, and if the owners are extremely wealthy or for whatever reason don't worry about money, it doesn't really matter what is going on with the economy, hard assets or the art market in general. We saw a supply response recently w/regard to McFarlane and Miller DKR (my personal opinion is that we have seen the highs, or will see when the DKR cover sells in the next auction). but I thought those pages were in different hands than the silver age material. I don't think we have seen a supply response in regard to A+ silver age pages. I think that we have seen lesser pages bring prices I thought only A+ pages would bring, but that is because (again in my opinion) the true A+ material isn't available, at least not at the public auctions I have seen. The market may have topped out, but I think until you get a genuine supply response (which in my opinion would require one of the major collectors to liquidate), you will not get a significant decline in prices, at least barring an economic collapse..

 

This happens a lot in art collecting. As prices rise collectors prefer to buy lesser pieces from well known artists than switch to top pieces from less well known or new artists. There is a cache to owning a Kirby FF page, even if it isn't very good, that you can't get from buying a really nice splash or cover from a second tier artist. That's why people pay 1,000s for Frazetta sketchs when they could get really nice, finished pieces from other artists.

 

Mike

[ComicConnoisseur]

I don't think this thread is focusing enough on the supply side of the equation. Gene, when you started this thread, were you specifically talking about the high end of the "OA market" (either directly or as an indicator of the overall market)? That was my assumption, but I wanted to be clear (I think we are already seeing a market bifurcation where fresh to market A+ or "perceived" A+ pages continue to bring in strong prices while the lower end has stalled).

 

My understanding is that supply of A+ superhero silver age and key 80's pages is not very deep. The bulk of it is in a handful of collections, and if the owners are extremely wealthy or for whatever reason don't worry about money, it doesn't really matter what is going on with the economy, hard assets or the art market in general. We saw a supply response recently w/regard to McFarlane and Miller DKR (my personal opinion is that we have seen the highs, or will see when the DKR cover sells in the next auction). but I thought those pages were in different hands than the silver age material. I don't think we have seen a supply response in regard to A+ silver age pages. I think that we have seen lesser pages bring prices I thought only A+ pages would bring, but that is because (again in my opinion) the true A+ material isn't available, at least not at the public auctions I have seen. The market may have topped out, but I think until you get a genuine supply response (which in my opinion would require one of the major collectors to liquidate), you will not get a significant decline in prices, at least barring an economic collapse..

 

This happens a lot in art collecting. As prices rise collectors prefer to buy lesser pieces from well known artists than switch to top pieces from less well known or new artists. There is a cache to owning a Kirby FF page, even if it isn't very good, that you can't get from buying a really nice splash or cover from a second tier artist. That's why people pay 1,000s for Frazetta sketchs when they could get really nice, finished pieces from other artists.

 

Mike

+1